Considering the Pros and Cons of Electric Car Battery Leases

By · April 11, 2013

Leaf Battery Rental Pricing

Nissan Leaf Battery Rental Pricing, UK. Photograph by Robert Llewellyn.

Buy a 2013 all-electric Smart ForTwo ED in Europe, and you’ll be asked if you want to lease the battery pack alongside the car—or own the batteries outright. Buy any one of Renault’s four production electric cars, and you’ll have no option but to sign up for a battery lease. While EV battery rental schemes have not hit U.S. shores, they are commonplace with European electric car drivers.

Even Nissan, which just announced its European pricing for the 2013 LEAF, will offer Europeans a choice between buying or leasing the LEAF’s 24 kilowatt-hour battery pack.

I’m in the privileged position to see things from both sides: the battery pack in my 2011 Nissan LEAF was included in its sticker price. Meanwhile, the battery pack in my 2013 Renault Twizy is leased from Renault for around $76 a month.

Pay for Long-Term Peace of Mind

Examine the battery pack capacity warranty for both cars, and you’ll see a similar figure quoted for the remaining capacity at which battery packs will be replaced.

Nissan warranties the battery to ensure that my LEAF retains at least nine capacity bars for five years or 60,000 miles, whichever comes first. That equates to a remaining battery capacity of 70 percent. If my car’s battery pack capacity falls below that figure in the warranty period, the faulty cells or battery pack will be replaced under warranty.

The same is true for the Twizy. Like all Renaults, the Twizy’s battery pack is guaranteed to retain 75 percent of its original capacity, giving at least some comfort to the buyer.

Here’s where it differs: unlike my LEAF, as long as I keep paying Renault a battery lease fee, the battery pack is warrantied to be better than 75 percent of its original capacity, regardless of how old my car gets.

Even at 10 years old, Renault commits to replacing the battery pack when needed. This could either be a new for old swap, a reconditioned pack, or perhaps even a newer technology pack, improving range over the original model.

Good For Used EV Buyers

Battery leases were designed to lower the sticker shock of electric cars—in the case of European LEAFs, by as much as $7,500. The key is to get consumers interested in taking the electric plunge to see an EV in a favorable light compared to a gas car. The fact that monthly payments go up, because the battery is being leased, can be justified by commensurate lower monthly fuel costs.

Still, with new car battery packs expected to last at least 10 years before replacement, battery leasing may not seem like a great deal for those driving a new car off the dealer lot. That is, until you consider the added value that battery leases offer to buyers of used EVs.

Battery leasing offers reassurance that whatever the age of the car, replacement battery packs—and therefore a guaranteed range and performance—will be covered under the terms of the battery lease. Renault, for example, offers free roadside assistance with its battery lease. It also gives owners access to discounted car hire for those longer trips well beyond the range of an EV.

Good for Automakers and Dealers Too

Dealers and automakers benefit as well. First of all, there’s asset ownership. When new, the battery pack provides a steady stream of money in the form of lease payments. When it is faulty or at the end of its life, the automaker retains ownership of the battery pack and its components, guaranteeing a revenue stream from recycling or reconditioning.

Second, there’s the practicalities of battery replacement. With a customer-owned battery pack, dealers often only replace the faulty cells in a pack. This results in extra training for the dealership, plus extra man-hours carrying out the work.

With a leased battery pack, the automaker can simply ship an entire replacement pack to a dealer once a fault has been identified, making it quicker and simpler for dealerships to simply drop out the faulty pack and lift in a new one. The faulty pack then heads back to the automaker for reprocessing or refurbishment.

Battery Rental, In the Eyes of the Beholder

At the end of the day however, the pros and cons of battery rental will depend on your own personal circumstances. Those in the arid heat of Arizona might find extra comfort in battery leasing, while those in the Pacific Northwest may find it an unwelcome extra long-term cost

As for me? With more than 35,000 miles on my LEAF, I’ve noticed no major degradation in battery capacity. On average, it gets rapid-charged several times a week, and has only ever hit turtle mode once. But I’ll admit: I worry far less about the leased batteries in my Twizy than I do in the battery pack I own in my LEAF.

Comments

· · 1 year ago

What am I missing? Simple math suggests this is a great approach - IF the $7500 LEAF price reduction becomes the standard deal, the battery warranty can be maintained indefinitely AND the monthly lease charge is in the $75 range. Battery insurance for $150 a year!

· · 1 year ago

Hi Nikki, not sure I'm following your post the best possible ways after leaving GCR, but glad to see your name as an author here.

As for the battery leases - I am still trying to spark the EV revolution in Bulgaria - we had to have LEAF in 2012, then in 2013, but local rep now says 2014...

Your posts keep high spirits guys, so thanks as always for the info as we're able to prepare about the EVs upfront.

· · 1 year ago

I'm not a big fan of leases but the leases can work great in the USA since the lease company can take the full $7500 tax-credit whereas some people would not be able to use the full tax-credit. This allows low lease rates.

At $199/month leases, some people are realizing they can lease a brand new Leaf for the same amount of money that it costs to fuel their gas guzzler each month. Suddenly the advantage of EVs then becomes apparent to people.

· · 1 year ago

What is the point of leasing your battery when you can lease the Leaf in the US for less than $199/month. With the low mileage listed in the battery agreement, the lowest Leaf leasing deal is as low as $139/month. At that point, it is better to lease the car.

Also, Leasing battery pretty much only give you a 70% range EV instead of what the new car supposes to give you.

· · 1 year ago

I think they should give you the option of buying a battery protection plan just like the road hazard plan dealers sell you for unexpected tire damage. Road hazard protection plans pay for new tires when the tire is damaged, if they did a battery protection plan it could be setup to protect you against battery degradation or failure. Though a plan like this would probably be more realistic when the price of batteries drops below a certain price.

· · 1 year ago

Welcome to the new site. One small quibble; the often quoted by the press (and sometimes supplied by Nissan) 70% capacity warranty is not the same as 9 of 12 capapcity bars, which turns to 8 bars at 66.25% per the Nissan Service Manual.

Tony

· · 1 year ago

Hi everyone. Thanks for the kind comments about joining PluginCars!

Tony -- thanks for the correction. You're quite right. Obviously, Nissan has yet to detail exactly what the battery lease service level agreement is. For Renault, it's 75% of its original capacity. I think we need to be careful not to confuse the battery capacity warranty with any future battery lease plan guaranteed battery capacity.

ModernMarvelFan -- are you implying that Nissan and other EV makers will only replace faulty battery packs with batteries at or near 70 % of original capacity? That's a very false economy, since your car would be in the shop for a new battery pack very frequently! To reiterate: the battery lease process from Renault would involve a total pack replacement when all or part of it falls below the minimum spec set out in the rental agreement. Your whole pack would be replaced, not just the faulty cell groups as is done now.

Finally, I think you've got a point with the lease pricing: Yes, at $199 a month, leasing the whole car is another option. Over here car leasing isn't as popular as it is in the US, so perhaps that's another reason why Nissan is offering battery leasing here in addition to car leasing: with more people buying outright, Nissan wants another way to ensure it retains the ownership of the battery for reprocessing etc.

· · 1 year ago

Hi everyone. Thanks for the kind comments about joining PluginCars!

Tony -- thanks for the correction. You're quite right. Obviously, Nissan has yet to detail exactly what the battery lease service level agreement is. For Renault, it's 75% of its original capacity. I think we need to be careful not to confuse the battery capacity warranty with any future battery lease plan guaranteed battery capacity.

ModernMarvelFan -- are you implying that Nissan and other EV makers will only replace faulty battery packs with batteries at or near 70 % of original capacity? That's a very false economy, since your car would be in the shop for a new battery pack very frequently! To reiterate: the battery lease process from Renault would involve a total pack replacement when all or part of it falls below the minimum spec set out in the rental agreement. Your whole pack would be replaced, not just the faulty cell groups as is done now.

Finally, I think you've got a point with the lease pricing: Yes, at $199 a month, leasing the whole car is another option. Over here car leasing isn't as popular as it is in the US, so perhaps that's another reason why Nissan is offering battery leasing here in addition to car leasing: with more people buying outright, Nissan wants another way to ensure it retains the ownership of the battery for reprocessing etc.

· · 1 year ago

Great to have Nikki back.
I always wonder what happens when things go terribly wrong. For example.

Let's say that Th!nk had been leasing their batteries. Now that they are bankrupt, I would own the car, but not the battery? What am I supposed to do with a car, but no battery?

Or would the leasing company still charge me to rent the battery, but have no ability to replace it because the battery pack is no longer being built.

I think I would rather A) own the car and battery or B) lease the car and battery.

· · 1 year ago

Ohh, what a nostalgia... So glad to find a great electric car website once again! (after allcarselectric). Love you, Nikki!

· · 1 year ago

John say . . .

"Let's say that Th!nk had been leasing their batteries. Now that they are bankrupt, I would own the car, but not the battery? What am I supposed to do with a car, but no battery?"

Boy, I'd love to get a nice clean subcompact EV like the Think, minus the battery, John. It would be selling pennies to the dollar, obviously.

The worst part of converting an old ICE car to electric power is cutting a big rectangular hole in the trunk and welding together some sort of battery box. With an OEM EV that needs a new battery, you're basically concentrating on wiring a new pack to fit into the existing space and - with the possibility that controllers and chargers still operate OK - quite possibly precious little else.

Granted, this sort of do-it-yourself project wouldn't be for everyone (and I know that most here on Plug In Cars aren't EV converter mechanics) but some of us would jump at the chance to get this sort of thing. What's the old expression? . . . one man's trash is another man's treasure.

· · 1 year ago

And of course there is a better way of leasing the battery , one which doesn't cost you when you do not use the car. the Better Place way. Better place provides the battery as part of a service contract, which allows me to travel unlimited by range within my home country of Israel, at a cost which is half of gasoline. Instead of being charged twice, once for the lease and once for the electricity, i get charged once, for the miles I use, regardless if i charge at home, charge at the beach or swap batteries while traveling 400 miles a day. batt-swap time, five minutes. Quick charge? bad idea, bad for the battery, bad for safety. Battery lease? What did i buy the car for, to look pretty or to travel. i pay for my travel and for nothing else!

· · 1 year ago

Nikki, welcome back! Always appreciate your articles and the discussions they generate. :)

Battery leases seem to raise more questions than answers. Perhaps it's just early & OEMs will fill in the details over the coming months. Here are some of my questions*:

- 1. What happens if owner needs to park car their for an extended period of time.
Example 6 mo (during, or at end lease)? Does the battery need to be removed/returned to dealer… costs?
- 2. Is there a (future) purchase option… say after 6-12 mo owner decides to combine lease / load payments?
- 3. What are the vehicle owner's options at end-of-lease? Is there purchase option, or could they opt. out and use 3rd party battery provider. (secondary market)
- 4. A 3-year lease could be smart option, if a new-better battery become available as a upgrade.
- 5. What is OEM battery support life-cycle? e.g. Can a battery be lease/purchased in 7-10 years time? (resale value w/ leasing?)

*just some things to think about; not expecting answers until more details are known

· · 1 year ago

why lease only the batteries? here in the US I lease the whole vehicle at a low cost.

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